Prepared by D. El-Hoss
Accounting
Errors
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Prepared by D. El-Hoss
8
4
For
Examiner’s
Use
On 1 August 2003 Polly Glotte started a furniture business with the following assets:
Freehold shop premises
Stock of furniture
Cash (paid into a business bank account)
$
20 000
8 000
5 000
Polly obtained a loan of $7000 from her uncle, Sven, on the same date and also paid this into
the bank account.
(a) (i)
Show how Polly’s Journal records the above transactions. No narrative is required.
Polly Glotte
Journal
Dr
$
Cr
$
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[7]
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9
For
Examiner’s
Use
(a) (ii) During August 2003 Polly discovered the following matters.
1.
New shop fittings had been purchased on credit from Quickbuild Supplies for
$6000, but no entry had been made in Polly’s books.
2.
A sale on credit to S Holmes, $601, had been entered in the Sales account
and in S Holmes’s account as $610.
3.
Goods bought on credit from J Robertson, $1000, had been entered in
J Robertshaw’s account.
4.
The purchase of office equipment for $3000 had been entered in the
Purchases account.
Make the required entries in Polly’s Journal to correct each of the above errors. No
narratives are required.
Polly Glotte
Journal
Dr
$
Cr
$
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[8]
0452/02/O/N/03
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Prepared by D. El-Hoss
14
5
For
Examiner’s
Use
Archer and Bowman are partners.
Their Profit and Loss Account for the year ended 31 August 2003 showed a net profit of
$18 490.
It was then found that the following errors had been made.
1.
No entry had been made for a stock of stationery, $30, on 31 August 2003.
2.
The stock of goods for re-sale on 31 August 2003 had been valued at selling price,
$8400, instead of cost price, $7 000.
3.
No entry had been made for depreciation of equipment. The equipment cost
$13 000 and was estimated to have a scrap value of $1000 after 6 years. All the
fixed assets of the partnership are depreciated using the straight line (fixed
instalment) method.
4.
Discount received of $210 has been included in the expenses instead of the
income in the Profit and Loss Account.
5.
A provision for doubtful debts is maintained equal to 5% of the debtors at the end of
each financial year. On 1 September 2002 the provision was $400. On 31 August
2003 the debtors owed the partnership $8400. No adjustment has been made to
the provision for doubtful debts.
(a) Prepare a statement to show the effect of correcting each of the errors 1–5 on Archer
and Bowman’s original net profit. Calculate the corrected net profit. The first one has
been completed as an example.
www.igcseaccounts.com
Archer and Bowman
Statement of Corrected Net Profit for the year ended 31 August 2003
Net Profit before corrections
Effect on Net Profit
+
–
$
$
Error 1
30
$
18 490
Error 2
Error 3
Error 4
Error 5
–––––
_____
–––––
_____
Corrected Net Profit
–––––––
_______
[10]
0452/03/O/N/03
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
15
For
Examiner’s
Use
Archer and Bowman’s partnership agreement states that
(i)
Interest is to be allowed on capital at 5% per annum.
(ii)
Interest is to be charged on drawings at 5% per annum.
(iii)
Archer is to receive an annual salary of $6000.
(iv)
Profits and losses are to be shared equally.
On 3l August 2003 the following balances appeared in the partnership books.
Capital account (at 1 September 2002) –
Archer
Bowman
Drawings during the year ended 31 August 2003 – Archer
Bowman
$
40 000
80 000
7 000
3 000
(b) Using the corrected net profit calculated in (a) prepare the Profit and Loss Appropriation
Account of Archer and Bowman for the year ended 31 August 2003.
Archer and Bowman
Profit and Loss Appropriation Account for the year ended 31 August 2003
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0452/03/O/N/03
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Prepared by D. El-Hoss
For
Examiner’s
Use
7
3
(a) When is it necessary to open a suspense account?
......................................................................................................................................[1]
(b) On checking his sales ledger, a trader found the following errors had been made.
1.
Cash received from Tarek El Sayed was correctly entered in the cash book but had
been credited to the account of Tarek El Sherif.
2.
A cheque received from Susan Zafar was correctly entered in the cash book but
had been debited to Susan Zafar’s account.
Only one of the above errors will require a correcting entry in the suspense account.
State which one and give a reason for your answer.
..........................................................................................................................................
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......................................................................................................................................[3]
(c) Mary Manake is a sole trader. She has very little knowledge of bookkeeping, but
attempted to prepare a trial balance and a set of final accounts.
The Balance Sheet she prepared is shown on the following page.
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© UCLES 2004
0452/03/M/J/04
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Prepared by D. El-Hoss
8
Balance Sheet as at 30 April 2004
For
Examiner’s
Use
$
40 000
8 000
––––––
32 000
8 500
6 100
––––––
46 600
––––––
Fixed assets at cost
Depreciation on fixed assets
Stock
Debtors
Capital at 1 May 2003
Net profit for the year
Drawings
Creditors
Bank overdraft
Suspense account (difference on trial balance)
34 000
8 440
––––––
42 440
7 300
––––––
35 140
5 200
2 010
––––––
42 350
4 250
––––––
46 600
––––––
When the books were checked the following matters were discovered.
1.
No adjustment has been made for expenses prepaid at 30 April 2004 amounting to $30.
2.
The bank statement received on 30 April 2004 showed that the bank had debited the
business’s bank account with $70 for interest charged on the overdraft. No adjustment
has been made for this in Mary Manake’s books.
3.
The total of the discount received column in the cash book, amounting to $150, has not
been transferred to the discount received account in the ledger. Because of this,
discount received does not appear in either the trial balance or the Profit and Loss
Account.
4.
Fixed assets costing $5000 had been sold during the year ended 30 April 2004.
Depreciation of $500 had been provided up to the date of sale. The amount received for
the assets, $4100, had been correctly entered in the cash book, but no other entries
had been made.
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Taking the above items into account, prepare a corrected Balance Sheet for Mary Manake
as at 30 April 2004.
The Balance Sheet should be shown using a suitable form of presentation, showing the
different types of assets and liabilities, and the working capital. The calculation of the
corrected net profit should also be shown, either within the Balance Sheet, or as a separate
calculation.
© UCLES 2004
0452/03/M/J/04
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
For
Examiner’s
Use
9
Mary Manake
Balance Sheet as at 30 April 2004
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[Total: 18]
© UCLES 2004
0452/03/M/J/04
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Prepared by D. El-Hoss
14
5
Ruth and Lucy Lebengo formed a partnership on 1 October 2003. They share profits and
losses 2:1. They agreed that a current account and a capital account would be kept for
each partner.
For
Examiner’s
Use
The Profit and Loss Account for the year ended 30 September 2004 showed a net profit
of $12 000.
Lucy has very little knowledge of bookkeeping, but attempted to prepare a Balance Sheet as
at 30 September 2004. The Balance Sheet she prepared, containing errors, is shown below.
Balance Sheet as at 30 September 2004
$
$
Premises at cost
Motor vehicles at cost
Less depreciation
15 000
1 500
––––––
Office equipment
Stock
Debtors
Capital – Ruth
Lucy
30 000
20 000
––––––
Net profit
Less drawings – Ruth
Lucy
Creditors
Bank overdraft
$
35 000
13 500
3 000
9 300
5 900
––––––
66 700
––––––
50 000
12 000
4 000
4 400
––––––
8 400
––––––
3 600
7 400
www.igcseaccounts.com
5 100
––––––
66 100
––––––
The following matters were then discovered.
1.
No adjustment had been made in the Balance Sheet for the following.
Depreciation of office equipment
Provision for doubtful debts
$
300
200
These items had been correctly charged in the Profit and Loss Account.
2.
Cash in hand, $100, had been omitted from the Balance Sheet.
3.
The overdraft shown on the bank statement had been entered in the Balance Sheet
instead of the overdraft of $5300 shown in the cash book.
© UCLES 2004
0452/03/O/N/04
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
15
(a) Taking the above matters into account, prepare a corrected Balance Sheet for Ruth and
Lucy as at 30 September 2004.
For
Examiner’s
Use
The Balance Sheet should be shown using a suitable form of presentation, showing the
different types of assets and liabilities, the working capital, and the capital and current
accounts of each partner.
Ruth and Lucy Lebengo
Balance Sheet as at 30 September 2004
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0452/03/O/N/04
© UCLES 2004
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
16
(b) On 1 October 2004 Ruth and Lucy decided to admit their brother, Paul, to the partnership.
Ruth, Lucy and Paul agreed to share profits and losses 2:1:1.
For
Examiner’s
Use
Goodwill was valued at $9000 on 1 October 2004, but did not appear in the books. The
partners agreed that adjustments should be made for Goodwill, but that a Goodwill
account was not to be maintained on the books permanently.
Complete the following tables to show what entries are required. It is not necessary to
prepare the ledger accounts.
(i)
To enter the Goodwill on the books –
account(s) to be debited
$
account(s) to be credited
$
………………………...
………...
………………………...
….……
………………………...
………...
………………………...
….……
………………………...
………...
………………………...
….……
account(s) to be debited
$
account(s) to be credited
$
………………………...
………...
………………………...
….……
………...
………………………...
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….……
(ii) To write off the Goodwill –
………………………...
………………………...
………...
………………………...
….……
[7]
[Total: 21]
Every reasonable effort has been made to trace all copyright holders where the publishers (i.e. UCLES) are aware that third-party material has been reproduced.
The publishers would be pleased to hear from anyone whose rights they have unwittingly infringed.
University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of
the University of Cambridge.
© UCLES 2004
0452/03/O/N/04
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
16
5
Ahmed Shafik’s financial year ends on 31 January. The totals of his trial balance on
31 January 2005 failed to agree. Ahmed entered the difference on the trial balance in a
suspense account.
For
Examiner’s
Use
REQUIRED
(a) Explain why it is necessary to open a suspense account when the totals of a trial
balance fail to agree.
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The following errors were later discovered.
1
Commission received, $390, was entered in the cash book but not in the commission
received account.
2
$400 paid to Mutua, a supplier, had been credited to the account of Mutola, another
supplier.
3
The purchase of stationery, $20, was credited to the cash book and debited to the
purchases account.
4
No entry had been made for cash discount, $15, allowed to Limo, a debtor, for prompt
payment.
5
The total of the sales returns journal, $420, had been credited to the purchases returns
account as $240.
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0452/03 M/J/05
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Prepared by D. El-Hoss
17
For
Examiner’s
Use
REQUIRED
(b) Prepare the entries in Ahmed’s journal to correct the above errors.
Narratives are not required.
Ahmed Shafik
Journal
Debit
$
Credit
$
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[12]
© UCLES 2005
0452/03 M/J/05
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Prepared by D. El-Hoss
18
Before the errors were discovered Ahmed calculated that he had made a net profit of
$16 000.
For
Examiner’s
Use
REQUIRED
(c) Prepare a statement to show the effect of correcting the errors 1–5 on Ahmed’s original
net profit and calculate the corrected net profit.
If the error does not affect the original net profit write ‘No effect’.
The first correction has been completed as an example.
Ahmed Shafik
Statement of corrected net profit for the year ended 31 January 2005
$
16 000
Net profit before corrections
Effect on net profit
+
–
$
$
Error 1
390
Error 2
Error 3
Error 4
Error 5
www.igcseaccounts.com
_____
_____
_____
_____
Corrected net profit
______
______
[5]
[Total: 19]
© UCLES 2005
0452/03 M/J/05
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
16
5
Ebor and Olicana are in partnership trading in sports goods. Their financial year ends on
31 July. After the preparation of their Trading and Profit and Loss Account for the year ended
31 July 2005 the following errors were discovered.
1
2
3
4
For
Examiner’s
Use
Olicana had taken goods costing $500 for her own use. This had not been recorded.
$15 paid for carriage inwards had been debited to the carriage outwards account.
The purchase of computer paper, $30, had been debited to the purchases account.
Motor vehicle repairs of $200 had been debited to the motor vehicles account. Motor
vehicles are depreciated by 25% on the cost of motors held at the end of each financial
year.
REQUIRED
(a) Complete the following table to show the effect of correcting the errors on the gross
profit and the net profit. If the correction of the error does not affect the profit write ‘no
effect’.
The first one has been completed as an example.
Error
Effect of correcting the error
on the gross profit
on the net profit
1
2
+$500
+$500
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3
4
[7]
You may use the space below for your workings.
© UCLES 2005
0452/03 O/N/05
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
17
For
Examiner’s
Use
Ebor and Olicana maintain a full set of books of account.
The following transactions took place on 31 August 2005.
1
2
3
Olicana took further goods costing $400 for her own use.
Ebor brought his own computer, valued at $900, into the business.
Ebor’s current account showed a credit balance of $10 000. It was agreed that he
should transfer half of this to his capital account.
REQUIRED
(b) Prepare the necessary journal entries to record the above transactions.
Narratives are required.
Ebor and Olicana
Journal
Debit
$
Credit
$
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[9]
© UCLES 2005
0452/03 O/N/05
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Prepared by D. El-Hoss
18
Ebor and Olicana have invited Lindum to join the partnership and have given him their final
accounts for the year ended 31 July 2005.
For
Examiner’s
Use
Lindum is aware that these final accounts will not provide all the relevant information he
needs.
REQUIRED
(c) State and explain two limitations Lindum should be aware of when he is studying the
set of final accounts Ebor and Olicana have provided.
1 .......................................................................................................................................
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2 .......................................................................................................................................
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[Total: 20]
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0452/03 O/N/05
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
4
2
Amina Nawaz is a sole trader. Her financial year ends on 31 August. The trial balance
prepared on 31 August 2006 showed a shortage on the credit side of $1450. Amina entered
this in a suspense account.
For
Examiner's
Use
The following errors were later discovered:
1
Goods costing $750, taken by Amina for her own use, had been debited to her
drawings account, but no other entry had been made.
2
$250 paid to Sabina Khan had been debited to the account of Robina Khan, another
creditor, in the purchases ledger.
3
$150 received in cash from a debtor, whose account had been written off in 2005, had
been debited to both the cash account and bad debts account.
REQUIRED
(a) Prepare the entries in Amina Nawaz’s journal to correct the above errors.
Narratives are not required.
Journal
Debit
$
Credit
$
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[7]
© UCLES 2006
0452/03 O/N/06
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
5
(b) Prepare the suspense account in Amina Nawaz’s ledger to show the required
amendments. Start with the balance arising from the difference on the trial balance.
For
Examiner's
Use
Where a traditional “T” account is used it should be balanced or totalled as necessary.
Where a three column running balance account is used the balance column should be
up-dated after each entry.
Suspense account
[5]
(c) Using your answer to (b) state whether you consider that all the errors on Amina’s
books have been discovered. Give a reason for your answer.
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[2]
© UCLES 2006
0452/03 O/N/06
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Prepared by D. El-Hoss
6
Amina Nawaz has a large number of debtors. She is considering preparing monthly control
accounts for her sales ledger. She believes that this will help to locate errors if the trial
balance fails to balance.
For
Examiner's
Use
REQUIRED
(d) State three advantages to Amina of preparing a sales ledger control account other than
the location of errors.
(i)
(ii)
(iii)
[3]
(e) Explain what is meant by a contra entry in connection with control accounts.
www.igcseaccounts.com
[2]
(f) State where the following items will appear in a sales ledger control account. If the item
will not appear in a sales ledger control account write “No entry”.
The first one has been completed as an example.
Item
Entry in sales ledger control
account
(i)
Sales returns
credit
(ii)
Bad debts
(iii)
Provision for doubtful debts
(iv)
Interest charged on overdue account
[3]
[Total: 22]
© UCLES 2006
0452/03 O/N/06
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
14
For
Examiner's
Use
After the trial balance had been prepared, the following errors were found.
1
Cash sales of $2000 had been paid into the bank but had not been posted to the
sales account.
2
Drawings of $900 had been correctly entered in the cash book but posted to the
drawings account as $500.
3
The cash account of $500 had been omitted from the list of balances.
REQUIRED
(c) Give the journal entries, with narratives, required to correct each error.
Dr
$
Cr
$
(i)
[3]
(ii)
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[3]
(iii)
[3]
© UCLES 2007
0452/02/M/J/07
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
15
(d) State the balance on the suspense account after these journal entries have been
posted to the ledger.
For
Examiner's
Use
Use the space below for your workings.
[1]
www.igcseaccounts.com
© UCLES 2007
0452/02/M/J/07
[Total: 22]
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
5
2
Zeema Jumbe is a trader. Her financial year ends on 31 January.
For
Examiner's
Use
She provided the following information.
2009
1 February
1 April
Insurance prepaid for 2 months to 31 March
Paid insurance premium for 12 months by cheque
$
440
3000
REQUIRED
(a) Write up the insurance account as it would appear in Zeema Jumbe’s ledger for the
year ended 31 January 2010.
Where a traditional “T” account is used it should be balanced and the balances brought
down on 1 February 2010.
Where a three column running balance account is used the balance column should be
up-dated after each entry.
Zeema Jumbe
Insurance account
www.igcseaccounts.com
[6]
The totals of Zeema Jumbe’s trial balance on 31 January 2010 failed to agree.
The difference was a shortage on the credit side of $350. This was entered in a suspense
account.
The following errors were later discovered.
1
A cheque, $540, paid to A Zaheer had been debited to the account of A Zahir.
2 The balance of the petty cash book, $50, had been omitted from the trial balance.
3
Rent received, $250, had been debited to the rent paid account.
4 No entry had been made for goods costing $385 taken by Zeema Jumbe for her own
use.
© UCLES 2008
0452/02/SP/10
[Turn over
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
6
REQUIRED
For
Examiner's
Use
(b) Prepare the entries in Zeema Jumbe’s journal to correct the above errors.
Narratives are not required.
Zeema Jumbe
Journal
Debit
$
Credit
$
www.igcseaccounts.com
[8]
© UCLES 2008
0452/02/SP/10
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
7
(c) Prepare the suspense account in Zeema Jumbe’s ledger to show the required entries.
Start with the balance arising from the difference on the trial balance.
For
Examiner's
Use
Where a traditional “T” account is used it should be balanced or totalled as necessary.
Where a three column running balance account is used the balance column should be
up-dated after each entry.
Zeema Jumbe
Suspense account
[5]
(d) Using your answer to (c) state whether you consider that all the errors on Zeema
Jumbe’s books have been discovered. Give a reason for your answer.
www.igcseaccounts.com
[2]
(e) Select one of the errors 1–4 above which has not been corrected by an entry in the
suspense account. Explain why an entry in the suspense account was not necessary.
Error
Explanation
[2]
[Total: 23]
© UCLES 2008
0452/02/SP/10
[Turn over
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
9
3
Abdul and Amina Mahmoud are in partnership. Their financial year ends on 30 April. The
trial balance prepared on 30 April 2008 failed to agree. The debit side totalled $95 857 and
the credit side totalled $95 457. The difference was entered in a suspense account.
For
Examiner's
Use
The following errors were later discovered:
1
Abdul had spent $20 of his personal funds to purchase business stationery. This had
not been recorded in the books.
2
Goods withdrawn by Abdul for personal use, costing $300, had been debited to his
drawings account but no other entry had been made.
3
$50 recovered from a bad debt (written off in 2006) had been correctly entered in the
cash book and had been debited to the bad debts account.
4
The partners decided that the debit balance of $2200 on Amina’s current account
should be transferred to her capital account. This had not been recorded.
www.igcseaccounts.com
© UCLES 2008
0452/03/M/J/08
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Prepared by D. El-Hoss
10
REQUIRED
(a) Prepare the entries in Abdul and Amina Mahmoud’s journal to correct the above errors.
For
Examiner's
Use
Narratives are not required.
Journal
Debit
$
Credit
$
www.igcseaccounts.com
[9]
(b) Prepare the suspense account in Abdul and Amina Mahmoud’s ledger to show the
required entries. Start with the balance arising from the difference on the trial balance.
Where a traditional “T” account is used it should be balanced or totalled as necessary.
Where a three column running balance account is used the balance column should be
updated after each entry.
© UCLES 2008
0452/03/M/J/08
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
11
Suspense account
For
Examiner's
Use
[4]
Before the errors were discovered Abdul and Amina Mahmoud calculated that they had
made a net profit of $12 900 for the year ended 30 April 2008.
REQUIRED
(c) Prepare a statement to show the effect of correcting errors 1-4 on the original net profit
and calculate the corrected net profit.
www.igcseaccounts.com
If the error does not affect the net profit write “No effect”.
The first correction has been completed as an example.
Abdul and Amina Mahmoud
Statement of corrected net profit for the year ended 30 April 2008
$
12 900
Net profit before corrections
Effect on net profit
Increase
Decrease
$
$
20
Error 1
2
3
4
Corrected net profit
[4]
© UCLES 2008
0452/03/M/J/08
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12
Abdul and Amina Mahmoud calculated the percentage of net profit to sales and found that it
was lower than that of the previous financial year.
For
Examiner's
Use
REQUIRED
(d) State two ways in which the percentage of net profit to sales could be improved.
(i)
(ii)
[2]
[Total: 19]
www.igcseaccounts.com
© UCLES 2008
0452/03/M/J/08
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Prepared by D. El-Hoss
8
3
Stella Maris started a business as a bookseller on 1 May 2008 with initial capital of $10 000
which she deposited in a new business bank account.
For
Examiner's
Use
She is not an experienced bookkeeper but has drawn up the following trial balance at
31 October 2008. Stella has put certain balances in the wrong column and may have made
other errors.
Trial Balance at 31 October 2008
Debit
$
Capital
Shelving and equipment
Purchases
Rent payable
Sales
Stock at 31 October 2008
General expenses
Cash at bank
Difference
Credit
$
10 000
5 000
24 000
6 000
34 900
5 300
2 500
47 700
7 400
300
47 700
REQUIRED
(a) State which accounting principle Stella was following when she deposited her initial
capital into a new business bank account.
www.igcseaccounts.com
[2]
(b) Name the account in which an unexplained difference on a trial balance should be
entered.
[1]
© UCLES 2008
0452/02/O/N/08
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
9
(c) Prepare a corrected trial balance at 31 October 2008.
For
Examiner's
Use
Stella Maris
Trial Balance at 31 October 2008
Debit
$
Credit
$
www.igcseaccounts.com
[10]
© UCLES 2008
0452/02/O/N/08
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Prepared by D. El-Hoss
10
(d) Using the information above, complete Stella’s trading and profit and loss account for
the six months ended 31 October 2008.
For
Examiner's
Use
Stella Maris
Trading and Profit and Loss Account for the six months ended 31 October 2008
$
$
Sales
Stock at 1 May 2008
nil
Purchases
Stock at 31 October 2008
Cost of sales
www.igcseaccounts.com
Gross profit
Expenses
Rent
General expenses
Net profit
[9]
[Total: 22]
© UCLES 2008
0452/02/O/N/08
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
6
2
Michael Ong started a business on 1 July 2007. He had very little knowledge of
bookkeeping, but attempted to prepare a set of final accounts at the end of his first year of
trading.
For
Examiner's
Use
The final accounts Michael prepared, containing errors, are shown below.
Trading and Profit and Loss Account
$
Sales of goods
Sale of motor vehicle (AB 246) at book value
80 000
2 000
Purchases of goods
Purchase of new motor vehicle (CD 357)
60 000
8 000
68 000
12 000
Closing stock of goods
Gross profit
General expenses
Bad debts
Net profit
10 800
200
$
82 000
56 000
26 000
11 000
15 000
Balance Sheet
Equipment
Bank
Debtors
Closing stock of goods
Purchases of stationery
Commission received
www.igcseaccounts.com
Creditors
Capital (balancing figure)
$
2 000
1 000
7 000
12 000
200
500
22 700
17 000
5 700
22 700
REQUIRED
(a) (i) Explain the difference between capital expenditure and revenue expenditure.
[2]
© UCLES 2008
0452/03/O/N/08
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
7
(ii) Explain the difference between capital receipts and revenue receipts.
For
Examiner's
Use
[2]
(b) Calculate the corrected net profit of Michael Ong for the year ended 30 June 2008.
Michael Ong
Statement of corrected net profit for the year ended 30 June 2008
www.igcseaccounts.com
[5]
On 1 July 2008 Michael Ong started to maintain a set of double entry records. A trial
balance drawn up on 30 September 2008 failed to balance. Michael entered the difference
on the trial balance in a suspense account.
© UCLES 2008
0452/03/O/N/08
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Prepared by D. El-Hoss
8
REQUIRED
(c) State one reason why it is necessary to open a suspense account when the totals of a
trial balance fail to agree.
For
Examiner's
Use
[1]
The following errors were later discovered:
1
Goods returned to J Chan, $20, had been incorrectly entered in the account of J Chua,
another supplier.
2
A cheque for the sale of equipment, $400, had been debited to the bank account, but
no other entry had been made.
3
Goods for Michael’s own use, $100, had been debited to both the purchases account
and the drawings account.
4
On 15 September 2008, $50 had been received from W Lee. This amount was
incorrectly debited to the bad debts account and credited to W Lee’s account.
W Lee’s account had been written off as a bad debt on 30 June 2008.
REQUIRED
www.igcseaccounts.com
(d) Complete the following table to show the entries required to correct the above errors.
The first one has been completed as an example.
account(s) to be debited
1
J Chan
$
20
account(s) to be credited
J Chua
$
20
2
3
4
[8]
[Total: 18]
© UCLES 2008
0452/03/O/N/08
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
4
2
(a) State which accounting document would show the amount of:
For
Examiner's
Use
(i) trade discount
(ii) cash discount
[2]
Chen makes the following sales on credit in the week ending 16 October 2009.
October
12
14
15
Customer
Artelis
Brook
Chadri
Reference
A4
B1
C7
$
230
300
55
He writes up his sales journal at the end of the week as shown below.
Chen
Sales journal
October
Reference
A4
$
12
Artelis
250
14
Brook
B1
300
www.igcseaccounts.com
16
Total sales for week
550
REQUIRED
(b) From the entries in the sales journal, write up the accounts in Chen’s ledger shown on
the next page to record the transactions for the month.
Sales account
[2]
Artelis account
[2]
Brook account
[2]
© UCLES 2009
0452/02/O/N/09
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
5
Chen realises he has made two errors in writing up the sales journal. He decides to correct
these errors by journal entries.
For
Examiner's
Use
REQUIRED
(c) Show the two separate journal entries necessary to correct these errors. Narratives are
not required.
Dr
$
Cr
$
Dr
$
Cr
$
[4]
www.igcseaccounts.com
(d) State the balance on each of the accounts in Chen’s ledger after correcting the two
errors.
Dr
$
Cr
$
Sales account
Artelis account
Brook account
Chadri account
[6]
[Total: 18]
© UCLES 2009
0452/02/O/N/09
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Prepared by D. El-Hoss
6
3
Anwar El Wakiel is a trader. He maintains a full set of accounting records including a journal.
For
Examiner’s
Use
REQUIRED
(a) State why a narrative should be shown as part of a journal entry.
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[2]
Anwar El Wakiel prepared draft financial statements (final accounts) for the year ended
30 April 2010.
The following errors were later discovered.
1
A cheque, $170, received from Zubin Khan had been credited to the account of
Zaffar Khan, another debtor.
2
Purchase of equipment, $1000, had been debited to the office expenses account.
3
Stationery, $19, had been debited to the purchases account.
4
No entry had been made for sales returns, $25, from Mariam Sitar.
www.igcseaccounts.com
© UCLES 2010
0452/22/M/J/10
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
For
Examiner’s
Use
7
REQUIRED
(b) Prepare the entries in Anwar El Wakiel’s journal to correct the above errors.
Narratives are required.
Journal
Debit
Credit
$
$
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.............................
.............................
www.igcseaccounts.com
.......................................................................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
[12]
© UCLES 2010
0452/22/M/J/10
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All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
8
(c) Indicate the effect of correcting each of the above errors 1– 4 on the profit for the year
(net profit). Circle the answer which you think is correct.
For
Examiner’s
Use
Give reasons for your answers.
The first one has been completed as an example.
Effect on profit for the year (net profit)
Error 1
Reason
Increase
Decrease
No effect
Correcting this error only affected the accounts of Zubin Khan and
Zaffar Khan. These accounts do not affect the profit.
Effect on profit for the year (net profit)
Error 2
Reason
Increase
Decrease
No effect
...............................................................................................................
..........................................................................................................................................
..........................................................................................................................................
...................................................................................................................................... [3]
www.igcseaccounts.com
Effect on profit for the year (net profit)
Error 3
Reason
Increase
Decrease
No effect
...............................................................................................................
..........................................................................................................................................
..........................................................................................................................................
...................................................................................................................................... [3]
Effect on profit for the year (net profit)
Error 4
Reason
Increase
Decrease
No effect
...............................................................................................................
..........................................................................................................................................
..........................................................................................................................................
...................................................................................................................................... [3]
[Total: 23]
© UCLES 2010
0452/22/M/J/10
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
6
3
Anwar El Wakiel is a trader. He maintains a full set of accounting records including a journal.
For
Examiner’s
Use
REQUIRED
(a) State why a narrative should be shown as part of a journal entry.
..........................................................................................................................................
..........................................................................................................................................
......................................................................................................................................[2]
Anwar El Wakiel prepared draft financial statements (final accounts) for the year ended
30 April 2010.
The following errors were later discovered.
1
A cheque, $170, received from Zubin Khan had been credited to the account of
Zaffar Khan, another debtor.
2
Purchase of equipment, $1000, had been debited to the office expenses account.
3
Stationery, $19, had been debited to the purchases account.
4
No entry had been made for sales returns, $25, from Mariam Sitar.
www.igcseaccounts.com
© UCLES 2010
0452/23/M/J/10
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
For
Examiner’s
Use
7
REQUIRED
(b) Prepare the entries in Anwar El Wakiel’s journal to correct the above errors.
Narratives are required.
Journal
Debit
Credit
$
$
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.............................
.............................
www.igcseaccounts.com
.......................................................................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
.......................................................................
.............................
.............................
[12]
© UCLES 2010
0452/23/M/J/10
[Turn over
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
8
(c) Indicate the effect of correcting each of the above errors 1– 4 on the profit for the year
(net profit). Circle the answer which you think is correct.
For
Examiner’s
Use
Give reasons for your answers.
The first one has been completed as an example.
Effect on profit for the year (net profit)
Error 1
Reason
Increase
Decrease
No effect
Correcting this error only affected the accounts of Zubin Khan and
Zaffar Khan. These accounts do not affect the profit.
Effect on profit for the year (net profit)
Error 2
Reason
Increase
Decrease
No effect
...............................................................................................................
..........................................................................................................................................
..........................................................................................................................................
...................................................................................................................................... [3]
www.igcseaccounts.com
Effect on profit for the year (net profit)
Error 3
Reason
Increase
Decrease
No effect
...............................................................................................................
..........................................................................................................................................
..........................................................................................................................................
...................................................................................................................................... [3]
Effect on profit for the year (net profit)
Error 4
Reason
Increase
Decrease
No effect
...............................................................................................................
..........................................................................................................................................
..........................................................................................................................................
...................................................................................................................................... [3]
[Total: 23]
© UCLES 2010
0452/23/M/J/10
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
17
6
Waseem Shah is a trader. His financial year ends on 31 July.
The totals of Waseem Shah’s trial balance on 31 July 2010 failed to agree.
The debit side totalled $398 240 and the credit side totalled $397 000.
He placed the difference on the trial balance in a suspense account and prepared draft
financial statements (final accounts).
For
Examiner's
Use
The draft financial statements (final accounts) included the following:
Revenue (sales)
Cost of sales
Expenses
$
247 600
163 100
51 500
REQUIRED
(a) Calculate the percentage of gross profit to sales. The calculation should be correct to
two decimal places.
Show your workings.
www.igcseaccounts.com
[2]
(b) Suggest two reasons why the percentage of gross profit to sales is greater than it was
at the end of the previous financial year.
(i)
(ii)
[4]
© UCLES 2010
0452/21/O/N/10
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Prepared by D. El-Hoss
18
After the preparation of the draft financial statements (final accounts) the following errors
were discovered.
1
Rent paid, $650, was correctly recorded in the cash book but had been entered in
the rent account as $560.
2
$860 paid by cheque to M Ali had been debited to the account of J Ali.
3
Repairs to machinery, $1150, had been entered in the machinery account.
4
The bank overdraft, $1520, had been omitted from the trial balance.
For
Examiner's
Use
REQUIRED
(c) Prepare the suspense account in Waseem Shah’s ledger to show the required entries.
Start with the balance arising from the difference on the trial balance.
Where a traditional “T” account is used it should be balanced and the balance brought
down. If there is no balance the account should be totalled.
Where a three column running balance account is used the balance column should be
up-dated after each entry.
Waseem Shah
Suspense account
www.igcseaccounts.com
[5]
(d) Select one of the errors 1– 4 above which has not been corrected by an entry in the
suspense account. Explain why an entry in the suspense account was not necessary.
Error
Explanation
[3]
© UCLES 2010
0452/21/O/N/10
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
19
(e) Prepare a statement to show the effect of correcting errors 1– 4 on the original profit for
the year (net profit) and calculate the corrected profit for the year.
For
Examiner's
Use
If the error does not affect the profit for the year (net profit) write “No effect”.
The first correction has been completed as an example.
Waseem Shah
Statement of corrected profit for the year ended 31 July 2010
$
Profit for the year (net profit) before corrections
Increase
in profit
$
Error 1
33 000
Decrease
in profit
$
90
2
3
4
www.igcseaccounts.com
Corrected profit for the year
[7]
[Total: 21]
© UCLES 2010
0452/21/O/N/10
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
14
6
Monica has a shop. She writes up the books of account herself but is not an experienced
bookkeeper. Her financial year ends on 28 February.
For
Examiner's
Use
The trial balance she prepared on 28 February 2011 showed a shortage on the debit side of
$720. Monica entered this in a suspense account and then prepared a draft income
statement showing a profit for the year of $3600.
The following errors were later discovered.
1
A cheque payment of $460 to repay a loan from Carlo has been correctly entered
in the cash book but $640 has been debited to his loan account.
2
Cash sales of $850 have been completely omitted from the books.
3
A cheque payment for $900 for goods has been entered in the cash book but no
other entry has been made.
4
The purchase of new display shelves for $1200 has been debited to the repairs
account.
REQUIRED
(a) Show the journal entries required to correct the above errors. The date and narrative
are not required.
Error 1
Dr
$
Cr
$
www.igcseaccounts.com
Error 2
Error 3
Error 4
[8]
© UCLES 2011
0452/12/M/J/11
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
15
(b) Write up the suspense account in Monica’s ledger from the above journal entries.
Dates are not required.
For
Examiner's
Use
Monica
Suspense account
[6]
(c) Prepare a statement to show Monica’s profit for the year after correcting the errors 1 - 4.
Monica
Statement of corrected profit for the year ended 28 February 2011
www.igcseaccounts.com
[5]
[Total: 19]
© UCLES 2011
0452/12/M/J/11
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
16
5
Leo Yang runs a gym and fitness centre. His financial year ends on 31 October. He
employs a book-keeper to maintain his accounting records.
For
Examiner's
Use
Leo Yang rents part of his premises to another business. The following account appeared in
Leo Yang’s ledger.
Rent receivable account
$
2009
Nov 1 Balance b/d
2010
Oct 31 Income statement
Balance c/d
100
2500
50
2650
$
2009
Nov 2 Bank
2010
April 1 Bank
1350
1300
2650
2010
Nov 1 Balance b/d
50
For candidates who are not familiar with the layout of the account shown above an
alternative presentation is provided.
2009
Nov 1 Balance
2 Bank
2010
April 1 Bank
Oct 31 Income statement
Rent receivable account
Debit
Credit
$
$
100
1350
Balance
$
100 Dr
1250 Dr
www.igcseaccounts.com
1300
2500
2550 Cr
50 Cr
REQUIRED
(a) Explain the following entries in the above account.
State where the double entry for each transaction would have been made.
(i) Balance 1 November 2009
Explanation
Double Entry
© UCLES 2011
[3]
0452/21/M/J/11
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
17
(ii) Bank 2 November 2009
For
Examiner's
Use
Explanation
Double Entry
[3]
(iii) Income statement 31 October 2010
Explanation
Double Entry
[3]
(b) Explain the significance of the $50 shown at the end of the account.
www.igcseaccounts.com
[2]
© UCLES 2011
0452/21/M/J/11
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All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
18
After the book-keeper had prepared a trial balance on 30 April 2011 Leo Yang decided to
draft a set of financial statements for the six months ended 30 April 2011.
For
Examiner's
Use
The draft financial statements, containing errors, are shown below.
Income Statement
$
Fees for the period
Sale of all old equipment at book value
Loan from Sports-aid
Less Purchase of new equipment
General expenses
Profit for six months
16 800
8 500
$
14 000
9 200
10 000
33 200
25 300
7 900
Balance Sheet
$
45 000
1 380
1 200
5 210
110
52 900
Premises at cost
Trade receivables
Rent received
Balance at bank
Purchase of stationery
Loan interest paid
Capital (balancing figure)
REQUIRED
www.igcseaccounts.com
200
52 700
52 900
(c) (i) State the difference between capital expenditure and revenue expenditure.
[2]
(ii) State the difference between capital receipts and revenue receipts.
[2]
© UCLES 2011
0452/21/M/J/11
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
19
(d) Calculate the corrected profit of Leo Yang for the six months ended 30 April 2011.
For
Examiner's
Use
Leo Yang
Statement of corrected profit for the six months ended 30 April 2011
www.igcseaccounts.com
[7]
[Total: 22]
© UCLES 2011
0452/21/M/J/11
[Turn over
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
17
5
Bethany Searle is a trader. Her financial year ends on 31 March. The trial balance prepared
on 31 March 2012 failed to agree. The difference was entered in a suspense account.
The following errors were later discovered.
1
The total of the discount received column in the cash book, $96, had not been posted
to the ledger.
2
Cash received from a tenant, $340, had been entered in the cash book but had not
been posted to the rent received account.
3
Stationery returned to the supplier, $24, had been correctly entered in the supplier’s
account but had been entered in the purchases returns journal.
4
The balance of the petty cash book, $100, had not been included in the trial balance.
5
The total of the sales journal had been overcast by $1000.
For
Examiner's
Use
REQUIRED
(a) Prepare the entries in Bethany Searle’s journal to correct the above errors.
Narratives are not required.
The first one has been completed as an example.
Bethany Searle
Journal
Debit
$
1
Suspense
www.igcseaccounts.com
96
Discount received
Credit
$
96
2
3
4
5
[8]
© UCLES 2012
0452/22/M/J/12
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Prepared by D. El-Hoss
18
Before the errors were discovered Bethany Searle calculated that she had made a profit for
the year ended 31 March 2012 of $14 940.
For
Examiner's
Use
REQUIRED
(b) Prepare a statement to show the effect of correcting errors 1-5 on the original profit for
the year.
If the error does not affect the profit for the year write “No effect”.
The first correction has been completed as an example.
Bethany Searle
Statement of corrected profit for the year ended 31 March 2012
$
14 940
Profit for the year before corrections
Effect on profit
Increase
Decrease
$
$
96
Error 1
2
3
4
5
www.igcseaccounts.com
Corrected profit for the year
[9]
Bethany Searle provided the following information at 31 March 2012.
Trade payables
Trade receivables
Bank overdraft
Cash
Inventory
$
21 570
19 540
2 880
100
14 210
REQUIRED
(c) Calculate the quick ratio. The calculation should be correct to two decimal places.
Show your workings.
[2]
© UCLES 2012
0452/22/M/J/12
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
19
(d) Explain the importance of the quick ratio to Bethany Searle.
For
Examiner's
Use
[2]
(e) Explain why the quick ratio is more reliable as an indicator of liquidity than the current
ratio.
[2]
[Total: 23]
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© UCLES 2012
0452/22/M/J/12
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
12
4
Mbane sells craft items from a market stall. He sells for cash and buys his goods on credit.
He prepared the following trial balance at 31 October 2012. Although the trial balance totals
were equal, Mbane had made some errors.
Mbane
Trial Balance at 31 October 2012
Dr
$
2 600
4 400
12 400
3 200
Capital
Motor vehicle
Purchases
Trade payables
Revenue
Inventory 31 October 2012
General expenses
Cash at bank
Motor vehicle expenses
Drawings
For
Examiner's
Use
Cr
$
30 800
3 300
600
5 200
860
8 640
36 000
36 000
Mbane had inventory on 1 November 2011 of $4500.
REQUIRED
(a) Prepare a corrected trial balance at 31 October 2012.
Mbane
Corrected Trial Balance at 31 October 2012
www.igcseaccounts.com
Dr
$
Cr
$
[7]
© UCLES 2012
0452/11/O/N/12
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
13
(b) From your answer to (a) and the other information shown, prepare Mbane’s income
statement for the year ended 31 October 2012.
For
Examiner's
Use
Mbane
Income Statement for the year ended 31 October 2012
www.igcseaccounts.com
[8]
(c) (i) State the formula for the calculation of working capital.
[1]
(ii) Calculate Mbane’s working capital at 31 October 2012.
[2]
© UCLES 2012
0452/11/O/N/12
[Turn over
All questions are the copyright of Cambridge International Examination Board.
Prepared by D. El-Hoss
14
Mbane wishes to know the effect on his working capital of changes in his business.
For
Examiner's
Use
REQUIRED
(d) In the table below, place a tick () under the correct heading to show the effect on
Mbane’s working capital of each of the following.
Increase
Decrease
No change
Increased revenue
Increased trade payables
Increased motor expenses
Reduced drawings
[4]
(e) (i) State the formula for the calculation of the current ratio.
[1]
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(ii) Calculate Mbane’s current ratio at 31 October 2012. Give your answer to one
decimal place.
[2]
[Total: 25]
© UCLES 2012
0452/11/O/N/12
All questions are the copyright of Cambridge International Examination Board.